Sweden’s AP funds start to fear regulated closure

By: Jonathan Boyd | 22 Jun 2012

Sweden’s AP funds, meant to act as “buffer” funds in the country’s long term savings structure, are starting to jostle for position as the government’s inquiry into their future gets closer to its 1 August reporting date.

The government set up its inquiry in September 2011 after expressing concern over the efficiency of the funds, including cost and performance issues. The inquiry is intended to consider the benefits of closing and merging funds against the possible increase in risk to long term savers from a concentration of assets into fewer funds.

Daily Svenska Dagbladet has reported that analysts expect at least a couple of the five AP funds will disappear – most likely the Fourth AP fund and the smaller Sixth AP fund.

However, Mats Andersson, CEO of the Fourth AP fund, has complained about the label of worst performer applied to his fund.

“Of course it is difficult. I am proud of the results we have achieved in the past four years. But that isn’t visible when all the time it is a a ten year period that is being measured. If you calculate the past four years we have both the best return and lowest costs,” Andersson told Svenska Dagbladet.

Over the period 2008 – 2011, the Fourth AP fund has returned SEK14bn more than the Second AP fund, according to figures published by the newspaper. However, if calculated from 2001, then the situation is reversed, and the Second AP fund has been the top performer.

Eva Halvarsson, CEO of the Second AP fund said that looking at a four year period does not tell the full picture, and that the fund should not be judged on its performance over this period alone. The Second AP fund still has the greatest AUM of the four big AP funds, at SEK216bn (€25bn).

Meanwhile, the managers of all AP funds are under renewed pressure ahead of the 1 August reporting deadline following articles in local press in the past week detailing payments for travel to conferences and alcohol-fuelled parties that may have broken local tax law.